Prop Firms That Shut Down: Every Major Collapse Since 2023 (And Why It Happened)

Ah, the prop trading industry. A place where thousands of firms promised to fund your trading dreams, collect your challenge fees, and then — in a shocking twist nobody could have predicted — disappear overnight with your money and a vague press release. Between 2023 and 2026, over 80 firms shut down, taking an estimated $50 million in trader funds with them. Some collapsed because of regulators. Some collapsed because of platform providers. And some, bless their hearts, collapsed after approximately one week of operation because nobody bought their challenges.

This is the complete breakdown of every major closure — who they were, how big they got, what killed them, and what the warning signs looked like before traders woke up to a 404 page where their funded account used to be.

The Three Events That Broke the Industry

Before we get into the individual obituaries, you need to understand the three structural failures that caused the collapse wave. None of these firms died in isolation. They died because the industry was built on foundations that were, to put it charitably, not exactly load-bearing.

Event 1 — The MetaQuotes Crackdown (February 2024)
MetaQuotes — the developer of MT4 and MT5, a.k.a the platforms that powered roughly half the prop industry — decided in February 2024 that they were done hosting unlicensed prop firms serving US clients. They started revoking licenses. Within nine months, MetaTrader's market share among prop firms dropped from 48% to 24%. Migrating to a new platform cost between $50,000 and $200,000 and took months. Most firms had neither. Surprise.

Event 2 — The Eightcap Broker Withdrawal (February 2024)
Eightcap, the broker powering a significant chunk of the industry's trade execution, halted services to prop firms at the end of February 2024. Any firm that had built its entire operational stack on Eightcap was, to use the technical term, cooked. The Funded Trader, Glow Node, Funds For Traders — gone. The lesson here is that "we're partnered with a major broker" is not the same as "we control our own infrastructure."

Event 3 — CFTC Regulatory Pressure
The CFTC fired the first major regulatory shot in August 2023 when it went after My Forex Funds. True Forex Funds had already been added to the CFTC's RED List in June 2023 — the first prop firm ever specifically designated. By December 2025, the RED List contained over 240 entities. The era of operating without compliance infrastructure was over. Some firms adapted. Most did not.

With that cheerful backdrop established, let's go through the bodies one by one.

My Forex Funds (MFF)

Background

My Forex Funds launched in July 2020, right as the retail prop trading boom was going absolutely vertical. Operated by Traders Global Group Inc. — incorporated both in New Jersey and Ontario — the firm grew at a speed the industry had never seen. By mid-2023, MFF was processing approximately 2,000 new customers every single day. It had over 60,000 live funded traders across 80 countries, had collected over $310 million in challenge fees since November 2021, and employed around 235 people at its peak. By any metric, it was the largest prop firm in the world. It was also, according to the CFTC, a massive fraud. Except — plot twist — it wasn't.

Business Model

Like most prop firms, MFF earned revenue through challenge fees. Traders paid to enter an evaluation, passed, and received a simulated funded account with a profit split. The CFTC later alleged MFF operated as a direct counterparty to substantially all customer trades, used software to execute orders at disadvantageous prices, and actively worked to minimize the probability of customer profitability. MFF denied every single allegation. As it turned out, the court agreed with MFF — but not before 60,000 traders spent two years locked out of their accounts.

The Shutdown — Starring the CFTC as the Villain

On August 29, 2023, U.S. District Court Judge Robert B. Kugler signed an emergency restraining order freezing MFF's assets and appointing a temporary receiver. Sixty thousand funded traders were locked out of their accounts overnight. No warning. No transition period. The CFTC's press release alleged fraud and misappropriation of funds — including the eyebrow-raising claim that CEO Murtuza Kazmi had transferred CAD $31.5 million in a suspicious manner suggesting asset dissipation.

Here's the part where it gets interesting. The Ontario Securities Commission had emailed the CFTC twelve days before the lawsuit was filed, confirming that the CAD $31.5 million transfer was a legitimate corporate tax payment to Canada Revenue Agency. The CFTC had that email. They filed the case anyway. They presented the transfer as evidence of fraud in court. Willfully. In sworn declarations.

The Legal Comeback Nobody Expected

In May 2025, U.S. District Judge Edward S. Kiel dismissed the CFTC's case with prejudice — meaning it cannot be refiled, ever. Special Master Jose L. Linares found that CFTC staff had acted "willfully and in bad faith," made multiple false statements in sworn declarations, and withheld key exculpatory evidence. The agency was sanctioned $3.1 million in attorney fees. Four CFTC lawyers and one investigator were placed on administrative leave. Acting CFTC Chairman Caroline Pham called the agency's own conduct "inexcusable." The court described it as "bad faith, obfuscation, and avoidance." Quite the performance.

By December 2025, MFF had recovered its assets through the Canadian receivership process. As of May 2026, the firm has processed 90% of the first rollout of outstanding payouts from August 2023. No confirmed relaunch date for new traders has been announced — they are conducting a full operational and financial review, which, given what just happened to them, is probably the least surprising sentence in this article.

Trader Feedback

Deeply divided, as you'd expect for a firm that spent two years in regulatory purgatory. Pre-shutdown, MFF had a loyal community — many traders had made consistent profits and were vocal advocates. Post-shutdown, sentiment split between those who believed the CFTC's fraud narrative and those who correctly identified that something was off. The court eventually validated the latter camp. Two years of frozen accounts leave a trust deficit that even legal vindication cannot fully close overnight.

True Forex Funds (TFF)

Background

True Forex Funds was a Hungarian-based prop firm founded in 2021, operating under the delightfully bureaucratic legal entity name True Proprietary Funds Kft. It offered one and two-phase evaluations with account sizes from $10,000 to $200,000 — scalable to $2.5 million — with an 80% profit split. For most of its existence, TFF had a genuinely strong reputation. A 4.6 Trustpilot score. Hundreds of positive reviews. Traders who praised payout reliability. A perfectly normal prop firm doing perfectly normal prop firm things.

The Warning Signs Nobody Read

The CFTC added True Forex Funds to its RED List in June 2023 — the first prop firm ever specifically designated. This fact was largely ignored by the broader trading community, which is a bit like ignoring a smoke alarm because you're busy cooking. By late 2023, traders on Reddit and Trustpilot began reporting withdrawal delays and unusual account restrictions. Complaints about artificial slippage and unauthorized trade manipulation started appearing on forums. By early 2024, it was clear the firm was in serious financial trouble. The complaints had been building for over two months before the final announcement.

The Shutdown

When MetaQuotes revoked TFF's MT4/MT5 license in early 2024, the firm had neither the infrastructure nor the capital to migrate. On May 13–14, 2024, True Forex Funds declared permanent closure due to "financial insolvency." Unlike most firms on this list, they actually used the word "insolvency" rather than hiding behind language like "strategic operational pause" or "we are exploring exciting new opportunities." Approximately 300 traders were left with $1.2 million in outstanding, unprocessed payouts. The website went dark. Support went silent. Game over.

Trader Feedback

Post-closure Trustpilot became a monument to the speed at which a 4.6 score can turn into a graveyard. Traders who had bought challenges in the final weeks received no refunds. One review captured the collective mood: "How does a firm that just robbed customers still have 4 stars?" — which is a fair question and also a useful reminder that Trustpilot scores are a lagging indicator, not a real-time risk assessment tool.

The Funded Trader (TFT)

Background

The Funded Trader was co-founded by Angelo Ciaramello in April 2021 and grew rapidly into one of the largest evaluation firms in the world. At its peak, TFT offered funded accounts up to $600,000 with profit splits up to 90%, and had paid out over $150 million to traders — a figure Ciaramello cited regularly as the ultimate proof of legitimacy. Well...if a firm's payout rate stands at 10-15% of what their turnover is....imagine how much money they made. The firm had a large Discord community, a personality-driven brand, and a social media presence built around Ciaramello himself. It was, by all external appearances, thriving.

Business Model

Two-phase evaluation model, frequent promotional discounts, aggressive YouTube influencer marketing. Revenue came primarily from challenge fees. TFT was partnered with broker Eightcap for trade execution. That last sentence turned out to be the most important one in the firm's entire history, though nobody knew it yet.

The Warning Signs — Including a Livestream That Backfired Magnificently

January 2024 was when the cracks became impossible to ignore. Traders reported slippage. Then payout denials. Then unwarranted drawdown violations. PropFirmMatch suspended TFT from its recommended list. Ciaramello hosted a public livestream to address the situation, presumably to reassure people. Instead, viewers watching the stream could see internal data showing approximately 10% of all payouts marked as "denied" — over $2 million in blocked payouts for January and February 2024 alone. The livestream meant to restore confidence instead confirmed exactly what traders were afraid of. Shortly afterward, TFT and its partner company Easton Consulting Technologies began mass layoffs.

The Shutdown

When Eightcap halted services to prop firms at the end of February 2024, The Funded Trader lost its operational backbone. The firm announced a "temporary pause," posted a countdown timer promising a relaunch in 21 days, and Ciaramello published a letter on X promising "a new look and feel" and "additional compensation to affected traders." The countdown timer reached zero. The relaunch didn't happen. Traders who had funded accounts, passed challenges, and were owed payouts were left with no recourse and no refunds. A Match-Trader migration was eventually attempted in August 2024, but trader confidence had already left the building and wasn't coming back.

Trader Feedback

The recurring complaint on Trustpilot and Reddit wasn't just that the firm closed — it was the gap between what was promised publicly and what actually happened. Refunds promised. Never processed. Compensation promised. Never paid. The countdown timer was a particularly memorable detail — a specific, visible promise that expired without consequence. In an industry already struggling with trust, The Funded Trader became the cautionary tale about what happens when personality-driven brands collapse and the personality in charge stops showing up.

SurgeTrader

Background

SurgeTrader was founded in 2021 by Jana Seaman and operated under the legal entity Surge Funding, LLC out of Naples, Florida. With a team of around 18 people, SurgeTrader differentiated itself with a single-phase "Audition" model — simpler, faster, and less bureaucratic than the two-phase evaluation standard. Accounts up to $1,000,000. Profit splits up to 90%. No mandatory trading days. In 2022, Traders Union named them Best Prop Trading Firm. In 2023, Benzinga called them Best Overall Prop Trading Firm. A Trustpilot score of 4.6 to 4.8 across over 1,200 reviews. By all external metrics, SurgeTrader was one of the better-run firms in the space.

The Shutdown — A Masterclass in Platform Dependency Risk

SurgeTrader's collapse is almost poetic in how completely it illustrated a single risk that the entire industry had been ignoring. When MetaQuotes revoked SurgeTrader's license in early 2024, the firm did what seemed sensible: it negotiated a migration to Match-Trade Technologies. Then Match-Trade also terminated SurgeTrader's license. Two different platform providers. Same result. The firm issued an official statement on May 24, 2024 that read: "Despite all of our efforts this week to get Match Trade Technologies to further communicate... we have been unsuccessful." All operations ceased immediately. If you had purchased a challenge in the days before that announcement, you were not getting a refund.

Trader Feedback

Pre-closure, SurgeTrader had earned its Trustpilot score legitimately — traders consistently praised the one-phase model, the transparent rules, and the responsive support team. Post-closure, those same traders were writing reviews about ignored emails and unrecovered funds. The contrast between the firm's reputation and its exit made the collapse feel particularly unfair. Some traders reported buying evaluations the week before the shutdown with no indication anything was wrong. The website offered no warning. The social media accounts went quiet. The support tickets were never answered.

Funded Engineer

Background

Funded Engineer launched in April 2023 — the newer kid on the block — and somehow grew to 12,000 traders across 118 countries within roughly 15 months. That's not a bad run for a firm that was barely a year old when it filed for bankruptcy. Based in Dubai and founded by Tristian Talbot and Harri Sawicki, the firm was known for two things that are surprisingly rare in this industry: a CEO who was an actual trader himself, and a support team that actually responded to messages. Revolutionary stuff.

The Shutdown — And the Unusually Decent Exit

Funded Engineer's collapse was triggered by FPFX Technologies withdrawing services from the prop space during the broader 2024 industry shakeout. On July 15, 2024, the firm announced permanent closure and a bankruptcy filing via official social media. What happened next was genuinely unusual for this industry: the CEO kept communicating. Payouts were delayed, not cancelled. The team worked through the backlog. And eventually, Funded Engineer relaunched on proprietary in-house technology — meaning it no longer depended on any external platform provider to keep the lights on.

Trader Feedback

Funded Engineer's collapse generated a noticeably more sympathetic community response than the other firms on this list. Traders acknowledged the CEO's transparency and the eventual delivery of payouts despite the formal bankruptcy. Reviews split between frustration at delays and genuine credit for the effort. "FE has gone through some hard times but stays up and is willing to do everything to keep the company up," read one Trustpilot review, which in context of this industry reads almost like a love letter. The eventual relaunch was built partly on that goodwill — which is either heartwarming or a testament to how low the bar had been set by everyone else.

Smart Prop Trader

Background & Shutdown

Smart Prop Trader was a Wyoming-based firm that launched in 2023 — part of the wave of new entrants that appeared during peak industry growth, attracted by the same gold rush economics that eventually wiped most of them out. It offered forex funding through a simulated trading environment with challenge-based evaluations. When the MetaQuotes and Eightcap shockwaves hit in 2024, Smart Prop Trader had no reserves to absorb the cost of migration, no licensed broker relationships to fall back on, and no path forward. It ceased operations in November 2024. No structured wind-down was communicated to traders. This is, unfortunately, a sentence that applies to a lot of firms on this list.

FundingTicks

Background

FundingTicks is the most recent firm on this list and the most instructive in a completely different way. It didn't collapse because of MetaQuotes. It didn't collapse because of Eightcap. It didn't collapse because of a regulator. It collapsed because someone decided in December 2025 to change the rules retroactively and apparently expected traders to be fine with it. CEO Khaled had claimed the firm had paid out more than $220 million to traders — a significant figure that suggests FundingTicks was operating at real scale before the self-inflicted wound of Q4 2025.

The Shutdown — How to Destroy Your Own Firm in 6 Weeks

In December 2025, FundingTicks introduced a package of rule changes without meaningful prior notice: a one-minute minimum trade hold for scalpers, higher daily profit requirements, and reduced profit splits. So far, annoying but survivable. The part that wasn't survivable: traders reported that previously valid trades and profits were being invalidated retroactively. Not for future trades. For trades already completed under the old rules. The Trustpilot score dropped from 4.1 to 3.2 within weeks. In January 2026, FundingTicks announced a "strategic wind-down" — which is corporate for "we're closing, but we're going to make it sound like a choice."

In fairness, the actual wind-down was handled better than most. Active evaluation accounts received full refunds. Master account holders in profit received 80% of profits. Live account holders in profit received 90% of profits plus a partial balance refund. Customer support remained available until January 31. By the standards of this industry, that's practically a standing ovation.

Trader Feedback

The retroactive rule changes generated the most visceral trader reaction on this entire list — more than firms that went fully dark without a word. The core complaint wasn't the new rules. It was that trades already executed under the old rules were being invalidated after the fact. That crossed a line traders considered non-negotiable. If your completed trade history can be revised at will, nothing in the evaluation is real. The structured refund process partially restored credibility, but nobody was confused about why the firm was closing.

Other Notable Closures (2023–2026)

Skilled Funded Traders (SFT) — Announced permanent closure on March 28, 2024 — the exact same day as The Funded Trader. All services terminated immediately, no structured refund process. The coincidence of the date gives you a sense of how simultaneous the industry pressure had become. Two firms dying on the same Tuesday is not a statistical anomaly. It's a structural event.

Funds For Traders — Stopped all services after Eightcap withdrew broker support. Had no alternative infrastructure in place. No formal wind-down process, no refunds communicated. Standard industry disappearing act.

Ascetic Capital — This one deserves its own paragraph purely for the audacity of the timeline. Ascetic Capital ceased operations after one week of trading, citing insufficient sales to sustain the business model. One week. They sold challenges for seven days, decided it wasn't working, and shut down. No MetaQuotes crackdown. No CFTC lawsuit. Just a business model that lasted less time than most people's gym memberships in January.

Karma Prop Traders — Closed after approximately two months of operations due to liquidity issues. Another undercapitalised firm that launched during peak industry growth without the reserves to survive even a short-term stress event.

Funded Friends — Shut down in September 2024 and was subsequently acquired by TradingFunds. One of the few closures on this list that resulted in a partial recovery of trader accounts through acquisition rather than outright liquidation. Small mercy, but a mercy nonetheless.

The Total Damage

Between February 2024 and the end of 2025, an estimated 80 to 100 proprietary trading firms shut down — approximately 14% of all prop firms globally, or roughly 1 in 7. Industry estimates converge around $50 million or more in blocked or unrecovered trader funds, though the real figure is almost certainly higher. Documented losses alone include $1.2 million from True Forex Funds, over $2 million in denied payouts from The Funded Trader in January–February 2024 alone, and unknown but significant amounts from SurgeTrader, Skilled Funded Traders, and dozens of smaller firms that left no public records behind.

The firms that survived shared three characteristics. Platform independence — firms that built proprietary technology or maintained licensed broker relationships were immune to the MetaQuotes decision. Regulatory compliance — firms like FTMO operating under European regulation kept MetaTrader access because they were licensed entities. And financial reserves — well-capitalised firms could absorb $50,000–$200,000 in platform migration costs. Most firms on this list had none of the three. They had a website, a Trustpilot page, and a dependency on someone else's infrastructure. In a stable market, that's enough. In 2024, it wasn't.

Warning Signs to Watch Before the Next One

Every firm on this list showed at least one of the following signals before the shutdown. These aren't hindsight observations — they were visible in real time, to traders who were paying attention.

Payout complaints multiplying on Trustpilot, Reddit, or Discord
True Forex Funds had complaints building for two months before permanent closure. The Funded Trader's reviews deteriorated for weeks before the infamous livestream. SurgeTrader's final pre-closure Trustpilot reviews included "payouts are delayed several weeks and most people assume we won't get paid." Social media is always first. If you see a pattern of payout complaints rather than isolated incidents, treat it as a structural warning, not a customer service issue.

Retroactive or sudden rule changes without notice
FundingTicks changed profit requirements and trade hold times and retroactively invalidated completed trades. Desperate firms change rules to reduce payout obligations — it's cheaper than paying traders and slower to cause public outcry than simply going dark. This pattern typically precedes collapse by one to three months.

Platform migration announcements under pressure
In 2024, any firm announcing a forced MetaTrader migration was under pressure. If a firm is changing its entire trading infrastructure mid-operation with vague timelines and no specifics about where your account funds sit during the transition, that's a red flag wearing a press release as a costume.

Payout delays without clear explanation
When a firm starts missing payout windows and cites "audits" or "technical issues" or simply stops responding to support tickets, the money is either already gone or being protected from distribution. Legitimate firms with healthy cash flow do not miss payout windows. The delay is the message.

Firm age under 18 months
Ascetic Capital lasted one week. Karma Prop Traders lasted two months. Funded Engineer lasted 15 months before filing for bankruptcy. An untested business model with no track record of surviving any kind of market stress event is a structural risk, regardless of how polished the website looks.

Final Take

The 2024 prop trading collapse wasn't a mystery. It was the inevitable result of an industry that scaled too fast, on rented infrastructure, with no regulatory compliance, during a period of unlimited growth — and then acted surprised when the music stopped. One decision by MetaQuotes wiped out over 80 firms. One broker withdrawal took out half a dozen more. And a small number of collapses — looking at you, FundingTicks — were entirely self-inflicted by people who apparently thought traders wouldn't notice when their completed trade history was being quietly revised downward.

The lesson isn't that prop trading is a scam. Most firms on this list weren't fraudulent — they were fragile. Built on borrowed platforms, borrowed broker relationships, and business models that only functioned in ideal conditions. When conditions changed, they didn't have the infrastructure, the licensing, or the capital to adapt. Traders paid the price.

Before you buy your next challenge, check how long the firm has been operating, whether it controls its own technology, what its pass rate actually looks like, and whether any payout complaints are already surfacing on Reddit. At PropTradingArea.com, we track pass rates, hidden rules scores, and community sentiment for every firm we list — precisely because the next collapse will look exactly like the last one: fine on the surface, broken underneath, and very apologetic in the press release.

Check our full firm rankings at proptradingarea.com before you fund your next account.